Regional Trade in a Purely Competitive Model

Henry Thompson

No auwp2013-15, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: This paper develops a competitive model of trade between three countries with constant cost production and identical utility functions. Trade depends on country size and productivity, and may be limited to two of the countries. Regional trade is observed if they happen to be closer together. The two countries trading only with each other avoid export competition. A country is excluded from trade if it has too little production potential. In the model with three goods, trade is limited to two countries unless each ranks highest in production potential for a unique good.

Date: 2013-09
New Economics Papers: this item is included in nep-int and nep-upt
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